Grain – Hay Report – 14 March 2014

International & National Summary – Grain:

• This week international markets were focused on the March USDA report which held no major changes for wheat. Analysts predicted global stocks would tighten further than what was released in the report. This misalignment between market perception and the USDA report saw CBOT prices retreat on Monday night. Unfortunately the downward movement of Chicago values was short lived as the trade went back to trading their own estimates. Following the trend of the last month CBOT May wheat futures again increased week on week to finish up A$1/t on A$261/t. The Australian dollar also gained ground for the week closing slightly above 90USc, which offset some of the gains seen in CBOT futures.
• As has been the case since harvest Australian domestic prices did not fully reflect the increases seen in international values this week. This reflects the Australian basis weakening and the gap between CBOT futures and Australian values narrowing.
• Expect to experience some market volatility internationally in the coming months as attention begins to focus on crop development in the northern hemisphere where winter crops are breaking dormancy. Traditionally the USDA ‘US Planting Intentions and Quarterly Stocks report’ scheduled for the end of this month has also caused significant movement. Early reports indicate US crop conditions are worsening due to dryness and a lack of snow cover, which could potentially drive Australian prices higher for domestic end users.
• The political situation in Ukraine continues to be a key market focus with any escalated tension likely to cause further price increases for international wheat and barley values. If the situation is resolved quickly expect the premiums this crisis has caused to dissolve rapidly.
• In the coming months it is expected local Australian prices will maintain current levels. Ultimately price will be determined by the development of US crop conditions, potential adverse conditions across Europe and the Black Sea and how early planting conditions develop across Australia.
• Domestically prices continue to hold firm at historically high levels across the nation. Feed Barley again found ground on the back of strong export demand. The increasing demand from exporters is pricing end users out of the market. Against the trend Newcastle prices dropped off significantly with one major buyer
• Prices look to remain elevated in both the northern and southern grain markets of Australia for the time being. Any weather developments particularly in Queensland and Northern NSW could the see price premium reduced. There is no doubt producers and end users alike would like to see a reprieve to the current drought conditions experienced in these regions. Inflated prices because of the dry conditions in northern Australia are seeing many end users fail to engage with the market.

National Summary – Hay:

• There been some fluctuation in hay prices this week. We believe that drought subsidies and fodder donations to drought affected regions may be contribution to this.
• Protein hay supplies will be tight in 2014. Any buyers seeking protein hay for 2014 are encouraged to source their requirements now.
• Vetch hay is in very short supply already. Much of the vetch hay in storage throughout Victoria and South Australia is already under contract.

Northern Australia:

• The Atherton Tablelands and South East Queensland are still reporting steady demand for hay. Feedlots are the most active buyers.
• Fodder supplies are low right across Northern Australia with buyers now sourcing hay from as far away as North Central Victoria and South Australia.
• Lucerne hay is particularly difficult to source and is trading for over $500t landed in Queensland.
• As farmers attempt to source roughage for drought stressed livestock it is important to be aware of any potential risks associated with new or unfamiliar feed. Where possible buyers are advised to have all drought stressed fodder (i.e. failed crops) tested and consult a nutritionist before feeding.

Southern Australia:

• Demand for hay from Queensland and Northern NSW is now impacting the hay market in Victoria and to a lesser extent South Australia.
• Lucerne hay prices strengthened again in some regions this week. Supply is getting tighter but demand remains steady.
• Demand for high grade protein hay has picked up in to Gippsland and South West Victoria as the season has now dried off.
• There is a clear indication that supplies of protein hay are going to be tight later in 2014. While some areas are still baling lucerne the market is best described as ‘hand to mouth’, there are currently little reserves for later in the year.
• Vetch hay supplies are becoming tight with good quality vetch hay particularly difficult to source.
• The supply of straw is good at present. Quality is variable, although mostly good.

Western Australia:

• Hay trading volumes are picking up, with interest in high grade cereal hay from the dairy and livestock sectors.
• The lucerne hay market is best described as hand to mouth. Supplies are low and prices are firm.
• Good yields from summer crops cut for silage have been reported. This will help make up the shortfall from the low yielding pasture silage harvest in 2013.
• Straw production is now complete with big yields and good quality being reported.

This report has been commissioned by Dairy Australia to provide an independent and timely assessment of grain and hay markets in each dairying region. It should be remembered that actual prices may vary for quality or other reasons. All prices are quoted are exclusive of GST.

The information in this report is collected and disseminated with due care and attention to its accuracy, but Dairy Australia accepts no liability if, for any reason, the information is inaccurate, incomplete or out of date.

• Mareeba March rainfall: 4.2mm (Ave: 173.5mm).
• YTD: 268mm (Ave: 664.7). This time last year the tablelands had received 511.6mm.
• The regular weekly rains for this region continue, so conditions are favourable here compared to all of inland Queensland.
• Wheat: $ +10 ($395 to $405). Wheat prices are up strongly based on exporter bids. This is following uncertainty about continuing grain supplies out of Crimea and the Black Sea area generally.
• Barley: $ +2 ($477 to $487). Feed barley prices are up slightly as the drought continues.
• Corn prices $ +40 ($350 to $360). The market had softened with Atherton Christmas corn becoming available. Now nearly three months later, the prospects for incoming normal corn production in central and southern Queensland are very poor. Many new crops are being cut for silage or green chop.
• Sorghum: $ +3 ($350 to $360). A modest rise in price compared to other grains. As the drought continues, northern Queensland sorghum usage is directed to domestic uses.
• Grain crops are doing well for May harvest.

• There has been rainfall throughout February, easing local demand for hay slightly.
• Demand remains firm from other parts of Queensland. There are also reports this week of hay being sent to Northern NSW.
• Hay supplies are very low due to the strong demand.
• Hay production has now ceased until the drier weather sets in.
• Pasture hay is trading at $280-300/t.

• Toowoomba March Rainfall: 4.8mm (Ave: 66.7mm).
• YTD: 28.8mm (Ave: 294.2mm), compared to 687.2mm last year.
• Some of the Darling Downs crop areas have gone two weeks without rain.
• Wheat: $ +13 ($374 to $384). Wheat prices are up strongly based on exporter bids. This is following the uncertainty over continuing grain supplies out of Crimea and the Black Sea area generally. Queensland mainly has higher protein wheats than those that come from the Black Sea ports, so prices may settle back quite quickly.
• Feed Barley: $ +2 ($363 to $373). Barley is trading at very high prices based on domestic demand. Exporters are not bidding for it as they can get better prices out of Western Australia and South Australia much more easily.
• Corn $ +25 ($402 to $412). The incoming dryland corn crops in the Darling Downs are so poor that many are being cut for fodder.
• Sorghum: $ +4 ($332 to $342). Only a modest rise in sorghum prices. Many traders calculate that there will be enough sorghum within Queensland for domestic requirements. So long as the sorghum export container trade with China does not start up again.
• Chances of being able to seed any summer crop are fading with limited rain.

• Hay supplies are low for all fodder types in South East Queensland. Most hay is being sourced from Victoria and South Australia to meet demand.
• Competition for hay is starting to pick up in the Southern markets and is having an impact on hay prices in Queensland.
• There are high numbers of cattle in feedlots, partly driven by low priced cattle from drought affected regions. Feedlots continue to be active buyers.
• There are reports of failed sorghum and maize crops, as well as low grade straw being baled between Southern Queensland down to Central West NSW to meet demand. Buyers should be mindful of feeding drought stressed crops to drought stressed animals; prussic acid and nitrate poisoning are real concerns and could prove detrimental.
• Bulk lucerne hay is in short supply throughout the Darling Downs and is now being sourced as far away as North Central Victoria and South East South Australia. Supplies will run out in 2014. Small squares are still available and trading for around $15-17/bale on farm.

• Lismore March rainfall total: 14.8mm (Ave: 138.6mm).
• YTD: 118.8mm (Ave: 458.1mm), compared to 714.8mm this time last year.
• SFW Wheat: $ +13 ($408 to $418). Wheat prices are up strongly based on exporter bids. This is following the uncertainty around continuing grain supplies out of Crimea and the Black Sea area generally.
• Feed Barley: $ +2 ($398 to $408). Barley is trading at very high prices based on domestic demand. Exporters are not bidding for it from the northern ports.
• Corn $ +25 ($397 to $407). The incoming dryland corn crops in the Darling Downs are so poor that many are being cut for fodder.
• Sorghum: $ +4 ($350 to $360). These prices are based on the Darling Downs purchases being trucked down the range, with road freight added. Following the rains in the area, there should be some local sorghum crops coming off soon.

• Demand remains strong, with livestock producers, dairy farmers and hobby farmers all active buyers.
• All hay supplies are low, due to decreased yields and steady demand. Buyers are now sourcing hay from Victoria and South Australia to meet demand.
• Straw supplies are also low. Some growers are now bailing 2013 stubble to meet the demand for roughage from Northern and Western NSW.
• Growers with irrigation have attempted summer crops like sorghum for silage. Yields were low.

• Forbes March rainfall: 88.6mm (Ave: 46.7mm).
• YTD: 184.6mm (Ave: 126.9mm), compared to 146.4mm this time last year.
• After the heavy rain last week, Forbes received just three millimetres of rain this week. But the 64 millimetres the previous week was a great boon to croppers preparing for the 2014 sowing season. It will provide a valuable bank of soil moisture for crops to finish on.
• SFW Wheat: $ +12 ($271 to $281). Wheat prices are up strongly based on exporter bids. This is following the uncertainty around continuing grain supplies out of Crimea and the Black Sea area generally.
• F1 Barley: $ +5 ($249 to $259). Barley prices have risen within this region to keep price relativity with wheat. The barley market within this region is being driven by feedlot grain demand, not by exporters.
• Corn $ +0 ($400 to $410). Only small areas of this region have been sown and all are under irrigation for a late March or April stripping.
• Sorghum $ +0 ($362 to $372). Sorghum supplies are probably sufficient for domestic demand through to October with no price movement. There is no exporter interest at these prices.

• Demand has continued to increase with hot dry conditions limiting paddock feed across much of northern and western NSW. Livestock and dairy farmers are active buyers.
• Cereal hay is in low supply due to the steady demand from drought affected western Queensland, as well as increasing local demand. Many buyers are looking to Victoria and South Australia to meet demand.
• Lucerne hay supplies are low and demand is strong.
• Summer crop plantings were down this year and yields are likely to be well below average. There is some interest from feedlots in baling forage sorghum.
• Straw is also in strong demand and continues to trade at $120-$130 on farm.

• Bega March rainfall total: 22.2mm (Ave: 78.3mm).
• YTD: 63mm (Ave: 229.2mm), compared to 152.4mm this time last year.
• There has been 17 millimetres of rain this week.
• SFW Wheat $ +12 ($285 to $295). Wheat prices are up strongly based on exporter bids. This is following the uncertainty around continuing grain supplies out of Crimea and the Black Sea area generally.
• Feed barley $ +5 ($263 to $273). The demand from feedlots in the northern drought areas is driving barley prices up.
• Triticale $ +5 ($271 to $281). With wheat and barley both up strongly, triticale prices are rising in sympathy. But there are very few sales at this time of year with growers storing triticale until winter.
• Oats: $ +10 ($270 to $280). Oat prices are firming in south eastern Australia. This is based on the deepening drought in northern New South Wales and more drought assistance going to farmers in the north.

• Demand remains steady. Many buyers are trying to hold off purchasing hay until later in the season to save costs.
• The strong demand for cereal hay from Queensland is starting to impact supply in southern NSW. Prices are rising due to the increased competition in the Southern market. Local buyers who purchased early will be well positioned for the season ahead.
• Supplies of lucerne hay are very low in most parts of eastern Australia, particularly in the dry land production areas. Prices are reflecting the tight supply and may pick up further in the coming weeks.
• Supply and quality of new season straw is good. There is steady demand at present from both dairy and livestock. Straw is now trading about $180-$200/t delivered, up $20 this week.
• Maize silage production was steady this year with good yields reported.

• Tatura March Rainfall total: 1.6mm (Avg: 35.3mm)
• YTD: 22.6mm (Ave: 102.9mm), compared to 49.1mm this time last year.
• There was no rain this week so the irrigation season will proceed as normal.
• Wheat: $ +16 ($273 to $283). Wheat prices are up strongly based on exporter bids. This is following the uncertainty around continuing grain supplies out of Crimea and the Black Sea area generally. This factor is driving wheat prices through all of south eastern Australia. More so in Victoria than New South Wales, as there is more potential for wheat export.
• F1 Barley: $ +7 ($240 to $250). Barley is in strong demand from feedlots of northern New South Wales and this is reaching into Victoria. Barley prices are trading at stronger prices here. This may be related to keeping the discount of barley to wheat at traditional levels.
• Triticale: $ +5 ($255 to $265). Triticale prices are up this week but mainly for sensible comparative pricing with wheat and barley. Most growers are holding triticale in farm silos for winter sale.
• Feed Oats: $ +7 ($220 to $230). More drought assistance is getting through to farmers of New South Wales. This is allowing grain oats to be trucked from further away, which is firming Victorian oat prices.

• Demand for hay from local dairy farmers and feed mills continues to increase.
• Increased demand for hay from drought affected areas in Northern NSW and QLD means that competition for hay in Northern Victoria is increasing. Cereal hay is of particular interest to these buyers.
• Cereal hay prices are fluctuating due to the increased competition. Supply is good at present but will become short in winter.
• Protein hay (lucerne and vetch) is in tight supply with much of the hay in storage already under contract.
• There are good supplies of straw locally, demand is slow. Straw will become sought after in winter this year as cereal hay becomes more difficult to source.

• Sale March rainfall: 6.8mm (Ave: 49.5mm).
• YTD: 42.6mm (Ave: 137.6mm), compared to 64mm this time last year.
• Most of the rains through Gippsland this week were around 5mm and most areas north of the Princes Highway had at least 8mm.
• SFW Wheat: $ +15 ($322 to $332). Wheat prices up strongly based on exporter bids following uncertainty about continuing grain supplies out of Crimean and the wheat pries generally up stronger in the Black Sea area.
• Barley: $ +7 ($292 to $302). Barley is in strong demand from northern NSW feedlots and this is now reaching into Victorian sources. But the strong barley prices are probably related to keeping the discount of barley to wheat at traditional levels. They are currently outside of this range within this dairy region.
• Triticale: $ +5 ($302 to $312). Growers are still holding triticale in farm silos for the winter sale with the price increase this week due to keeping the price comparative with wheat and barley.
• Feed Oats: $ +7 ($245 to $255). More drought aid getting through to NSW farmers allows grain oats to be trucked from further away; this is keeping the oats price firm.
• The recent price rise spike is relating to threats to world wheat security, this may prove to be temporary and could easily be reversed within two weeks.

• Demand for hay from non-irrigated regions is picking up. High quality hay is sought after but difficult to source and prices are increasing.
• Demand for cereal hay has picked up from dairy farmers preparing for autumn calving, working on building up fodder reserves for winter. Demand for lucerne and vetch hay also remains strong.
• The supply of lucerne hay is largely hand to mouth at this stage. We expect lucerne hay prices to start to increase in coming weeks as supply tightens further. Vetch is difficult to source, where it can be found quality is variable.
• It’s been a big year for pasture hay production with good yields, but variable quality being reported.
• Due to reports of variable quality hay, all buyers are well advised to use a trusted hay supplier, ensure they have their hay inspected and get a feed analysis before purchasing any hay this year.
• Some straw is available in Gippsland but quality is variable. Gippsland buyers seeking straw are advised to look to North Central and Western Victoria at this stage.
• Prices remain unchanged this week however we expect to see an increase in the near future as prices are picking up in key supply areas like Northern and Central Victoria, particularly for higher grade hay.

• Port Fairy March rainfall: 2.4mm (Ave: 37.8mm).
• YTD: 28.8mm (Ave: 104mm), compared to 33.4 mm this time last year.
• SFW1 Wheat: $ +15 ($268 to $278). The world tensions over Ukraine and the control of Crimea have threatened world wheat security. This week’s price rise is very large but it may only be temporary depending on political outcomes.
• Feed Barley: $ +7 ($240 to $250). Barley prices have risen which is probably being drawn up by the lift in the wheat prices than anything else. Domestic demand and exporter buying interest for the Middle East should prevent any major drop in the barley price.
• Triticale $ +11 ($258 to $268). The prices have increased this week following the other grains but very little triticale is being bought or used. Growers still have it in silo storage for sale this coming winter.
• Feed oats $ +7 ($229 to $239). More drought aid getting through to NSW farmers allows grain oats to be trucked from further away, thus allowing Vic oats to firm.
• Expect more variability in wheat than barley prices due to the above comments.

• Demand is starting to pick up as the season dries off. However many buyers are using their own pasture hay supplies before looking to purchase hay.
• There are good stocks of cereal hay still available but quality is variable. Supplies may come under pressure later in the year with ongoing demand from Northern Australia.
• Lucerne hay is sought after and becoming hard to source. Prices have picked up in the past few weeks and further price rises are expected in the coming months.
• Vetch and clover hay are still moving into South West Victoria. Vetch is difficult to source and clover hay is also in limited supply.
• Pasture hay is in good supply but variable quality. Good quality pasture hay for trading may be difficult to source this year.
• There is plenty of straw available and quality is good.

• Mount Gambier March rainfall: 1.6mm (Ave: 35.2mm).
• YTD: 51.8mm (Ave: 87.6mm), compared to 26.6mm this time last year.
• No rain this week and now three weeks since it had 20mm.
• Wheat $ +6 ($287 to $297). World tensions over the Ukraine and control of Crimea have threatened world wheat security causing the price of wheat to increase. This however may only be temporary and will depend on political outcomes. The main importing regions threatened by blockages to exports out of the Black Sea ports are in the Middle East. These are large markets for South Australian wheat and barley.
• Feed barley $ +5 ($264 to $274). Barley prices are up, but not as strongly as through all of southeast Australia. The change is not as marked in this region of South Australia.
• Triticale $ +5 ($270 to $280). Triticale price has increased due to the increase in barley and wheat, but little trading this time of year with merchants and growers holding it for winter conditions to arrive.
• Oats $ +10 ($222 to $232). Drought assistance packages to landowners in northern NSW means they will receive freight assistance with grain purchases in some circumstances causing South Australian feed oats to now come into play.

• Demand for hay is slowly picking up, typical for this time of year. Buyers are seeking higher grade hay such as lucerne and there is also some demand for straw.
• Enquiries for good quality pasture/clover hay and cereal hay are now starting to come from the drought affected regions in Northern Australia. Generally the supply of quality pasture hay is low.
• Cereal hay is available but quality is variable. Demand from the north is expected to put pressure on supplies in the southern markets later in the year and prices will increase as a result.
• Demand for lucerne hay is starting to pick up with reports that hay is moving to Queensland from the Keith region. Locally supplies are lower than average. Demand from outside the region will put pressure on the local market later in the year.
• Lucerne hay prices are firm and growers are not willing to negotiate on price due to limited supply. Buyers seeking lucerne or vetch hay should do so as soon as possible. Prices will only increase in the coming weeks and months as supply diminishes.
• After a big yielding season many local growers have filled empty hay sheds with pasture hay for their own use. Quality is variable. It is unlikely there will be high volumes of good quality pasture hay available for trading later in the year.
• Straw is available and quality is generally good.

• Murray Bridge March rainfall: 8.6mm (Ave: 20.4mm).
• YTD: 98.8mm (Ave: 53.3mm). 31mm this time last year.
• It has now been 4 weeks since the heavy rains that caused flooding in this part of South Australia and since then it has mostly been dry. Some rain was welcomed around the area with 8.6mm falling at Murray Bridge and 6mm at Parawa.
• Wheat $ +7 ($265 to $275). Wheat prices up strongly based on exporter bids following uncertainty about continuing grain supplies out of Crimea and the Black Sea area. This factor is driving wheat prices up through all of south eastern Australia but in particular South Australia due to having more ports than other states.
• Feed barley $ +2 ($240 to $250). Had a solid jump in price last week. A more modest one this week. The south Australian barley is not being driven by the drought in NSW.
• Triticale $ +5 ($250 to $260). The price adjustments this week are to keep it in its regular slot with wheat and barley but no trades are expected at this time of year. Purely a domestic grain.
• Feed Oats $ +0 ($183 to $193). This region around Adelaide is too far from north west NSW for drought assistance packages to have any impact on the feed oat pricing at this stage.

• Demand for hay on the domestic market is starting to pick up with hay moving as far as Northern NSW and Queensland.
• Cereal hay supplies are good but quality is variable. With most of these northern buyers seeking cereal hay it is expected prices will rise in the coming weeks.
• The Northern Territory drawing hay out of Central SA, due to a shortage of hay and local production not due to start until April. Pellet mills are the most active buyers.
• Supplies of protein hay (medic and vetch) are low and may be difficult to source later in the year.
• Straw quality has been high and supply is good.
• Prices remain unchanged this week.

• Bunbury March rainfall: 0mm (Ave: 15.5mm).
• YTD: 0.4mm (Ave: 34mm), Compared to 3.8mm this time last year.
• Hot weather with no rain continued this week in Bunbury.
• Wheat $ +7 ($312 to $322). World tensions over the Ukraine and control of Crimea have threatened world wheat security. This is indeed a very large weekly price lift, which may only be temporary depending on political outcomes. The main importing regions threatened by blockages to exports out of the Black Sea ports are in the Middle East.
• Barley $ +5 ($290 to $300). With low domestic demand for barley for domestic stock use, bids are formed by exporters and have not moved this week unlike that on the barley prices on the east coast of Australia.
• Triticale $ +10 ($275 to $285). The main Perth buyer of triticale has indicated a price rise to growers wishing to deliver this commodity.
• Oats $ +0 ($190 to $200). No local or international factor has changed the price for this commodity this week.

• Hay trading on the domestic market is increasing with particular interest in high grade hay. Dry conditions are driving the increased demand.
• Cereal hay supplies are good due to high yields in the 2013 season. Quality is variable.
• There is steady demand for cereal hay into the livestock and dairy markets at this stage due to the dry conditions.
• The lucerne hay market is hand to mouth at present, prices remain firm.
• Pasture hay and silage production was down in 2013, after a wet start to spring resulted in a short baling window.
• There has been increased interest in summer cropping this year to make up for the lack of pasture silage. Conditions for silage have been favourable and yields are good.
• Straw bailing is now complete with production above average. There is limited demand for straw from the domestic market at present. Both yields and quality were good this season.

• Smithton March rainfall: 3.6mm (Ave: 50.8mm).
• YTD: 73.4mm (Ave: 124.9mm), Compared to 34mm this time last year.
• It is now two months since northern Tasmania has received any useful rain.
• Wheat $ +15 ($350 to $360). Wheat prices are up strongly based on exporter bids. This is following the uncertainty around continuing grain supplies out of Crimea and the Black Sea area generally. This factor is driving wheat prices up through all of south eastern Australia. More so in Victoria and South Australia than New South Wales, as there is more potential for wheat to be exported from these states.
• Feed barley $ +10 ($325 to $335). Mainland barley prices have risen. They have been drawn up by the lift in world wheat prices more than anything else. Domestic demand and exporter buying for the Middle East should prevent any major drop in the mainland barley prices.
• Triticale prices $ +5 ($328 to $338). Pricing relates to mainland triticale. It is currently not being traded on the mainland or in Tasmania. Most of the commodity is being held in farm silos for winter sales.
• Oats prices $ +10 ($308 to $318). Tasmania is a long way from northern New South Wales. However, more drought aid is getting through to farmers in New South Wales. This is allowing grain oats to be trucked from further away and keep Victorian prices firm. Tasmanian imported oats compete in this same market.

• Conditions are drying off and demand has picked up from the dairy sector as a result.
• There is particular interest in good quality lucerne and oaten hay where it can be sourced.
• Lucerne supplies are low and demand is steady. Anyone seeking lucerne hay is advised to secure their requirements now for later in the year.
• The supply of pasture hay is good and some hay is trading. Quality is variable due to the patchy weather conditions during the hay season.
• New season straw is now becoming available with the grass seed harvest now coming to an end.